2. INTERNATIONAL TRADE
International trade involves the licensed
exchange of goods across borders. It leads to
the establishment of trade agreements and
trade policy. These encourage harmonious
relationships between nations that rely on one
another for a better standard of living across
their populations.
3. International trade
International trade is the exchange of capital,
goods, and services across international borders
or territories because there is a need or want of
goods or services. In most countries, such trade
represents a significant share of gross domestic
product.
4. TYPES OF FOREIGN TRADE
There are three different types of foreign trade
Import trade: It is the purchase of goods and services by one
country from another country.
Export trade: It is the selling of goods and services to another
country.
Entrepot trade: This process is also called re-export.
◦ The term entrepôt, also called a transshipment port and historically referred to as a port
city, is a trading post, port, city, or warehouse where merchandise may be imported,
stored, or traded before re-export, with no additional processing taking place and with
no customs duties imposed.
5.
6. Reasons of International Trade
The five main reasons international trade takes
place are
◦Differences in technology,
◦Differences in resource endowments,
◦Differences in demand,
◦The presence of economies of scale, and
◦The presence of government policies.
7. 7 Key Benefits of International
Trade
More Job Opportunities.
Expanding Target Markets & Increasing Revenues.
Improved Risk Management.
Greater Variety of Goods Available.
Better Relations Between Countries.
Enhanced Company Reputation.
Opportunities to Specialize
•.
8. ACTIVITY
The modern international trade regime is based on
four main principles.
Most-Favored-Nation Treatment (MFN),
National Treatment (NT),
Tariff binding, and
The general prohibition of quantitative restrictions.
9. Most-Favored-Nation Treatment (MFN)
“Most-Favoured-Nation” (“MFN”) treatment requires
Members to accord the most favourable tariff and
regulatory treatment given to the product of any one
Member at the time of import or export of “like
products” to all other Members. This is a founding
principle of the WTO.
10. National Treatment
The national treatment principle prohibits countries
from using domestic taxes and regulations to offset
the value of tariff concessions and is, therefore, a
significant tool in promoting trade liberalization. The
national treatment principle, as well as the MFN
principle, is often invoked in WTO disputes.
11. Tariff binding
Commitment not to increase a rate of duty beyond
an agreed level. Once a rate of duty is bound, it may
not be raised without compensating the affected
parties.
12. The general prohibition of quantitative
restrictions
Quotas: Quotas are quantitative restrictions on
imports and exports of certain goods.
Quantitative Restrictions (QRs) refer to
the restrictions in the form of limits or quotas on the
amount of commodities that can either be imported
or exported.
13. A quantitative import and export
restrictions
A quota is a government-imposed trade
restriction that limits the number or monetary
value of goods that a country can import or
export during a particular period.
14. The five theories of international trade
Classical Country-Based Theories:
Mercantilism,
Absolute Advantage,
Comparative Advantage and
Heckher-Ohlin Theory.
Modern Firm-Based Theories:
Product Life Cycle,
Global Strategic Rivalry and
15. 3 classical theories of international trade
The classical theories are divided into three theories
:-
i) Theory of Mercantilism.
ii) Theory of Absolute Advantage.
iii) Theory of Comparative Cost Advantage.
16. Mercantilism
Mercantilism was based on the idea that a nation's
wealth and power were best served by increasing
exports and reducing imports. It's characterized by
the belief that global wealth was static and that a
nation's economic health relied heavily on its
supply of capital.
17. The country focused on the motto that, on a priority
basis, it must look after its own welfare and
therefore, expand exports and discourage imports.
Mercantilism
18. MCQ
Who invented international trade
Who is the father of international trade?
What was the first international trade?
Who was the first international trader in India?
The other names of international trade
When did India join world trade?
Who is the father of Indian economy?
Who invented free trade?
Examples of international trade
19. MCQ Answers
Adam Smith
Eli Heckscher and Bertil Ohlin
Silk. Often seen as one of the first truly global trade routes, the Silk Road – actually a network of
roads – ran from China to Rome.
Around 1500. In 1498 Portuguese explorer Vasco da Gama landed in Calicut (modern day Kozhikode
in Kerala) as the first European to ever sail to India.
foreign trade or global trade
India has been a WTO member since 1 January 1995 and a member of GATT since 8 July 1948.
Father of Indian Economic Planning is Sir M. Vishweshwaraiah.
Adam Smith and David Ricardo
Products: food, clothes, spare parts, oil, jewellery, wine, stocks, currencies, and water.
◦ Services :Tourism, banking, consulting, and transportation.
